Liberty. It’s a simple idea, but it’s also the linchpin of a complex system of values and practices: justice, prosperity, responsibility, toleration, cooperation, and peace. Many people believe that liberty is the core political value of modern civilization itself, the one that gives substance and form to all the other values of social life. They’re called libertarians.

Thursday, June 7, 2012

Paul Krugman’s Intellectual Great-Grandfather

You’ve probably never heard of
Walter Weyl, but he invented the role of liberal economics popularizer.
His literary descendants include Stuart Chase, John Kenneth Galbraith,
Paul Samuelson, and Paul Krugman.

Consider these arguments: The richest 1 percent of
Americans are getting richer and more powerful every year. The 1 percent
dominates the economy in an unhealthy way. The only way to solve this
problem of increasing income inequality is to tax and redistribute the
incomes of the rich in ways that benefit the national interest and not
just the privileged few.

Is this a summary of a recent column by Paul Krugman? No. Substitute
“the plutocracy” for “the 1 percent,” and you’ll accurately describe the
ideas of Walter Weyl, the most important Progressive thinker you’ve
never heard of.
Walter Weyl was Paul Krugman’s intellectual great-grandfather. He
invented the role of liberal economics popularizer. His literary
descendants include Stuart Chase, John Kenneth Galbraith, Paul
Samuelson, and Paul Krugman.
This year is the centennial of Weyl’s major work, The New Democracy.
Weyl’s book is long out of print, but the arguments he advanced against
the wealthy and in favor of a larger, more intrusive state are still
being used today, even if the people who make these arguments have
forgotten their creator.

His solution to what he saw as wasteful consumer spending was to have government regulate consumption as well as production.

Walter Weyl was born in Philadelphia in 1873. His friends and family
remembered him as someone who was quiet, polite, and very intelligent.
He entered Philadelphia’s Central High School at 13 and did so well that
the school’s principal exercised a rarely used power and awarded Weyl a
high school diploma that was also a bachelor’s degree from the
University of Pennsylvania. In fact, Weyl went straight from high school
to graduate work at the Wharton School.
Weyl spent a few years on fellowships in Germany. He was so thrifty
that he came back to America having spent his grant money down to the
last quarter, which he used for a shave and a tip. He graduated from
Wharton with a Ph.D. in 1897, and spent the next decade trying to figure
out what to do with his life. He worked for a year at the Treasury
Department churning out economic reports, but found that boring, and
quit the government.
Weyl then became a political organizer, and spent a year ghostwriting
a book for United Mine Workers President John Mitchell. The book, Organized Labor, was published in 1903, and foreshadowed many of the arguments Weyl later made in The New Democracy.
In 1906, Weyl had a brief encounter with fame as one of the
organizers for a dinner honoring author Maxim Gorky, who was in the
United States raising money for Russian communists. The dinner featured
many eminent Americans, most notably Mark Twain. (Twain wasn’t a
socialist, but the socialists liked him for his eminence and because
Twain loved to question authority.) One attendee, top Hearst editorial
writer Arthur Brisbane, was so moved by Gorky’s speech that he spent the
evening dictating an editorial urging his readers to back the
Bolsheviks.

In Weyl’s telling, this conspicuous
consumption generated fear and envy in the middle class, who wasted
their money on products they didn’t need and couldn’t afford.

In 1907, Weyl married Bertha Poole and settled on a small farm in
Woodstock, New York. He began to turn out article after article on
economic and social issues. For The Outlook, Weyl wrote a series of
fictionalized portraits of immigrants, as a way of illustrating the
problems newcomers to America faced. For The Atlantic Monthly and the
North American Review, Weyl warned about the declining French birth
rate, fretting that it was dropping so dramatically that France would
become depopulated unless it were to admit more immigrants.
In 1911, relatives of Weyl’s wife set up a trust fund to enable Weyl
to write a book without laboring under the uncertainty of a freelancer’s
fluctuating income. This money enabled Weyl to finish The New Democracy, which he published in 1912.
The villains of Weyl’s book are what we would call “the 1 percent”
and he called “the plutocracy.” The plutocrats, Weyl believed, were
largely responsible for the problems of our country. They controlled the
government through the use of their wealth to control political
campaigns. The rich also manipulated the press through their advertising
dollars and because they controlled the newspaper chains that
increasingly dominated the American media.
The rich also dominated the lower classes through their lavish
spending on luxury products (strawberries in January! French
chauffeurs!) that were far beyond the means of the middle class. In
Weyl’s telling, this conspicuous consumption generated fear and envy in
the middle class, who wasted their money on products they didn’t need
and couldn’t afford. As a result, the typical middle-class worker felt
like a failure because he would never make as much money as Andrew
Carnegie or John D. Rockefeller.
“Our over-moneyed neighbors cause a relative deflation of our
personalities,” Weyl wrote. “A two-thousand-dollar-a-year man need not
spend like a Gould or a Guggenheim. Everywhere, however, we meet the
millionaire’s good and evil works, and we seem to resent the one as much
as the other. Our jogging horses are passed by their high-power
automobiles. We are obliged to take their dust.”
But Weyl recognized that small purchases by tens of millions of
middle-class Americans fueled economic growth. Compare the lives of the
average American of 1911 with that of his parents or grandparents, Weyl
wrote, and you’ll find a vast increase in the amount of stuff in
the typical home. “Nowhere in the world is there so lavish (and often
misdirected and perverse) an expenditure upon clothing, food, furniture,
etc. as in the United States today. The enormous expansion in the use
of electric cars, telephones, tobacco, beer, coffee, sugar, fresh
fruits, fresh vegetables, canned goods, etc., indicates this change.”

Weyl recognized that small purchases by tens of millions of middle-class Americans fueled economic growth.

Moreover, Weyl understood that steadily rising incomes meant that
most members of the middle class could afford small luxuries that made
their lives better than their ancestors. Over 3.5 million Americans had
telephones, for example: “one connection for every family in the United
States. Street car riding for pleasure, city pleasure parks, summer
vacations, the purchase of books, newspapers, and magazines, the
enormous extension of the five-cent cigar, the democratization of
watches, bicycles, cameras, carpets, etc. signify a change within the
last half a century of the farthest reaching proportions.”
Weyl believed that such steady economic growth proved that Karl Marx,
who famously predicted that capitalists would force workers to accept
lower and lower wages until the revolution came, was wrong. Weyl thought
Marxists were “absolute socialists” who believed in an “essentially
religious” doctrine that taught “the vicarious atonement of all our
economic sins by one class that bears the cross … It (Marxism)
proclaimed a heaven on earth as opposed to a present hell. It presented
to its believers a choice as absolute as that between good and evil,
thus saving them the intolerable travail of an appraisal of reforms and
half measures.”
But what Weyl wanted was what the Marxists wanted—an economy
dominated by a strong and growing federal government. The one difference
was that Weyl preferred—at the moment—to leave small businesses alone.
“The goal of the democracy is a maximum of control with a minimum of
regulation,” Weyl wrote. That meant severely regulating or nationalizing
big businesses while leaving little ones comparatively free.
Weyl argued that the best way to establish government dominance of
the economy was through gradual measures. Small steps in growing
government, he argued, would ultimately result in a giant leap in state
power. Going to owners of coal mines with the offer of a “merely nominal
tax” on coal would ultimately result in the federal government
dominating the energy industry. “A minimum tax on inheritances,” Weyl
added, “contains the germ of a definite prohibition of insanely large
accumulations.” The goal for socialists, Weyl wrote, “is progress step
by step. It is progress by indirection. It is a successful flank attack,
instead of a brave, but suicidal, frontal attack.”
Many of Weyl’s goals were ultimately achieved, such as tighter
regulation of foods and drugs, and the establishment of national
insurance “against sickness, accident, and invalidity,” which the next
generation divided into unemployment insurance and Social Security.

What Weyl wanted was what the Marxists
wanted—an economy dominated by a strong and growing federal government.
The one difference was that Weyl preferred—at the moment—to leave small
businesses alone.

In at least one case, future generations adopted Weyl’s methods. He
called on the courts to interpret Article 1, Section 8 of the
Constitution, which gives Congress the power “to pay the debts and
provide for the common defense and general welfare of the United
States,” as giving Congress unlimited power (instead of just the power
to tax). A generation later, New Deal judges agreed with Weyl’s
expansive interpretation of the General Welfare Clause, most notably in Helvering v. Davis, the case that determined that the Social Security Act was constitutional.
But other goals of Weyl’s were ignored. He wanted to criminalize
early death, calling for mandatory inquests of anyone who died before
age 60. His solution to what he saw as wasteful consumer spending was to
have government regulate consumption as well as production. “There are
women who are heterodox in religion, politics, and cooking, who
nonetheless dare not wear a small hat when other women wear their hats
large.” In Weyl’s world, women would only wear the hats that bureaucrats
would allow them to buy.
Walter Weyl’s case for an endlessly expanding welfare state would be
refined and developed by successive generations of writers. But the
economic case for big government was first made in The New Democracy—a forgotten work that, on its centennial, should become better known.Martin Morse Wooster, a former
editor of The Wilson Quarterly and The American Enterprise, is writing a
history of America between 1910-14.